How to Increase Your Chances of Getting a Loan
Getting any kind of loan is usually going to involve a few checks and a few questions. This is designed to protect both the lender and the borrower, by making sure that you have enough money to pay the loan back and that you won’t default on payments.
But on occasion, these questions and requirements can sometimes seem a little too stringent and actually prevent you from taking out loans that you believe you can afford. This can then stand in the way of your doing the things that you want to do and that in turn can be a source of stress.
So with that in mind, how can you stack the cards in your favour and give yourself the best odds of being approved for a loan?
Borrow Within Your Means
The first and most obvious way to improve your chances of getting a loan is to ask for less cash – and generally to only go after loans that you genuinely feel you can afford. If what you’re thinking about borrowing is in fact too much, then consider paying a sum of money upfront so that you might be able to ask for less.
Another tip is to shop around. Just because one lender won’t offer you the money, that doesn’t mean that nobody will be willing. Look for a loans broker who will help you look at multiple different loans and find the one best suited to your specific circumstances. Or if that doesn’t work, try looking for specialist lenders – like ‘low credit lenders’.
You can also try looking to places other than conventional lenders. How about trying a PayPal loan for example? Or an Argos card?
If it’s a very big loan you’re thinking of taking out – such as a mortgage – then you might be asked to bring in bank statements for the last three months. This is to demonstrate the way you normally spend your money and how much you generally have in your account at any given time. To ensure this all goes smoothly, try to live carefully for three months prior to the loan and cancel your direct debits.
During this time, you should also try to stay out of your overdraft. While overdrafts are agreed and there’s nothing wrong with using them, banks want to see that you are living easily within your means.
Improve Your Credit Score
Finally, it’s important to improve your credit score as this can very often be what holds you back. Your credit score is based on your ability to pay back loans and stay out of financial trouble. The best way to build a credit score quickly, is to take out a credit card and then make sure that you always pay the repayments on time.
The irony is that taking out small loans and paying them off is actually better for your score than avoiding loans entirely. That’s because your score is based on your ability to pay back loans. You need to get in debt in order to demonstrate this!